Exploring the application of analytical procedures by Jordanian external auditors

Abstract

This study aims to explore the application of analytical procedures (AP) as a major external auditing procedure in the developing country context of Jordan, a context characterised by the prevalence of closely held businesses, and limited demand for an external audit of high quality (Abdullatif, 2016; Almarayeh, Aibar-Guzman, & Abdullatif, 2020). To do so, the researchers conducted semi-structured interviews with twelve experienced Jordanian external auditors. The main issues covered are the detailed use of AP as an audit procedure and the most significant issues that may limit the effectiveness and reliability of this procedure in the Jordanian context. The main findings of the study include that AP are generally used and favoured by Jordanian auditors, despite their recognition of several problems facing the application of AP, and potentially limiting its reliability and effectiveness. These problems include weak internal controls of some clients, low quality of data provided by some clients, a lack of availability of specialised audit software for many auditors, and a lack of local Jordanian industry benchmarks that can be used to develop expectations necessary for the proper application of AP. The study recommends the establishment of such industry benchmarks, along with better monitoring by the regulatory authorities of the quality of company data, and increasing the efforts of these authorities on promoting the auditors’ use of specialised audit software in performing AP